Most startup ideas do not fail due to bad ideas, but because no one checked if those ideas were needed in the first place. Investors pump their capital into the product, believing it to be the next big thing, only to face losses and eventual shutdown of the product.
Sometimes, it is difficult to understand the potential of a new idea because it is challenging to distinguish between a good and a bad one. The difference, however, lies in gathering raw customer data and making sense out of whether the customer has any use for the product or not. Let us understand the concept in depth, below.
What is idea validation?
It is the process of collecting evidence from actual customers about your product/service concept and interpreting it. The interpretation will reveal whether your product truly meets their needs or not. This will validate your idea or indicate that you need to pivot immediately.
The process starts with an idea and ends with acquiring a customer who is willing to pay for your solution. Its purpose is to test the idea in real-life scenarios before releasing the finished product.
What is the need for idea validation?
When we discuss the process, a question naturally arises - why should we do it? Validating ideas is essential because new, exciting ideas often have unpredictable elements in them, which may or may not work with customers for various reasons. Google Glass is a great example for this category - it seemed like a novel and exciting idea, but wasn’t something people wanted or required.
Performing validation on your problem statement before jumping to a solution is the best approach that you can adopt. Building a solution first before identifying a problem wastes money, time and other resources.
In some cases, the process helps determine if the timing is right for product adoption and whether you can deliver the solution efficiently.
What are the benefits of idea validation?
The three major benefits of idea validation are:
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Reduced risk: Validating your idea before creating the solution part saves money, time and effort on a product unlikely to solve a real problem. This will reduce the risks associated with the failure of the product and will also make your pivot easier.
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Faster value creation: Finding the right problem and target customers through idea validation will help you narrow down on what exactly your customers want and how the current solution is ineffective. With this information, you can build a customised solution, ensuring you deliver value swiftly to them.
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Cost minimisation: Having your ideas validated before product creation saves you a lot of money from being wasted on unnecessary things. This can be useful while enhancing the product or for marketing it.
What are the factors that make your idea a success?
Your customer research process will typically reveal a few factors that can be classified into the following categories:
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Target customers and social systems - Determine how useful and appealing your idea is to your target customer segment
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Idea compatibility - Identify if your idea matches your customer’s need or want.
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Relative advantage - Check whether your idea can outperform competitors and whether target customers perceive it as superior.
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Complexity - Is the idea easy to understand or do customers need new skills/knowledge?
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Scope for trial - Can your product be experimented with before purchase?
What are the steps involved in idea validation?
There are a total of 4 steps involved in this process:
Define goals
The first step in validating your idea is to define your goals - this will give you clarity on what you want to focus on and validate. Let us see an example for each aspect to understand this better
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Problem: Is your problem worth solving?
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Solution: Is your product/service going to solve the problem?
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Features: How do your core features work?
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Business model: Is your business model feasible and scalable?
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Price: Is there enough demand for your product even if you set a premium price?
These are merely examples for you to get an idea - fix your goals such that you validate the most important assumption for your business/product.
Develop a hypothesis
After setting your goal, you will need to come up with a hypothesis to test it. Always choose the assumption that is more likely to fail and has higher stakes.
Dropbox’s critical assumption was that people would trust a third-party application to store their files online, rather than using hard disks or local storage. This was vital for them since their value delivery was dependent on users adopting cloud storage. They validated their idea with a demo video explaining how the product worked. It generated engagement and registrations for them - this confirmed their assumption that people were interested in their offering.
Also, carefully define your minimum viable conditions while testing assumptions. If you simulate ideal conditions, you don’t stand to gain much in practice.
Experiment and revise
Test your hypothesis critically using experiments. This may be in the form of a Minimum Viable Product (MVP), landing pages, prototypes or even emails. You can also use interviews, surveys and A/B testing to gain more clarity.
Surveys and interviews are sufficient for problem validation, while product validation will require prototypes. Price validation is where landing pages and A/B testing end up being useful.
Validate and develop
At this stage, you will be able to identify whether your assumption is valid or invalid. If your key assumption proves to be correct and the idea is promising, keep refining it. Although the process isn’t a guaranteed formula for success, the data collected will guide you in developing a useful product.
You can use tools like the Validation Board or Validation Canvas for idea validation. Question everything critically to make the right decision. Don’t overcomplicate the process and test with the right audience for accurate results. Remember that observing others’ mistakes will also teach you what not to do in your business. While validation is often complex, following it in a systematic manner can make the process easy, while giving you clarity on your product. It also helps you save money and time, and can help you pivot. It shows whether you have reached your destination or are still a mile away.
